text:
(a) Each creditor who obtains the signature of more than one person on a consumer credit contract shall deliver to each person who does not in fact receive any of the money, property, or services which are the subject matter of the consumer credit contract, prior to that person’s becoming obligated on the consumer credit contract, a notice in English and the languages set forth in subdivision (b) of Section 1632 in a clear and conspicuous manner in at least 10-point Arial equivalent type as follows:NOTICE TO COSIGNERYou are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn’t pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.

The creditor can collect this debt from you without first trying to collect from the borrower. The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.

This notice is not the contract that makes you liable for the debt.

(b) Whenever notice is required to be given under subdivision (a) or (d) and the consumer credit contract is written in a language other than English or a language set forth in subdivision (b) of Section 1632, the creditor shall deliver the notice as required in subdivision (a) or (d) in English and in the language in which the consumer contract is written.

(c) The requirements of subdivisions (a) and (b) do not apply to a creditor offering or extending open-end credit, as defined in Regulation Z, to joint applicants if all of the following conditions are satisfied:

(1) The application or agreement signed by each applicant clearly and conspicuously discloses that after credit approval each applicant shall have the right to use the open-end credit plan to the extent of any limit set by the creditor and may be liable for all amounts extended under the plan to any joint applicant.

(2) After credit approval, the creditor issues for the use of each applicant any credit device such as a credit card which may be used to obtain credit under the open-end credit plan and sends the credit device to the address specified in the application or otherwise delivers the credit device in a manner specified in the application or agreement signed by each applicant.

This paragraph does not apply to a creditor who does not issue a credit card or other credit device in order to obtain credit under the creditor’s open-end credit plan.

(d) A lessor under a lease shall deliver to each person who does not in fact receive the vehicle which is the subject of the lease contract, prior to that person becoming liable on the lease contract, the following notice in English and the languages set forth in subdivision (b) of Section 1632 in a clear and conspicuous manner in at least 10-point Arial equivalent type in lieu of the notice required by subdivision (a):NOTICE TO COSIGNERYou are being asked to guarantee this lease. Think carefully before you do. If the lessee doesn’t pay, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

You may have to pay up to the full amount owed on the lease if the lessee does not pay. You may also have to pay late fees or other collection costs, which increase this amount.

The lessor can collect on the lease from you without first trying to collect from the lessee. The lessor can use the same collection methods against you that can be used against the lessee, such as suing you, garnishing your wages, etc. If this lease is ever in default, that fact may become part of your credit record.

This notice is not the contract that makes you liable for the lease obligation.

(e) “Regulation Z” has the meaning set forth in Section 1802.18.

(f) The word “your” in the last sentence of the third paragraph of the notice in English set forth in subdivisions (a) and (d) shall be italicized.

(g) (1) On or before January 1, 2023, the Department of Financial Protection and Innovation shall make available for download on its internet website translations of the notices set forth in subdivisions (a) and (d), which may be used to satisfy the requirements of this section.

(2) If additional languages are added to Section 1632 by subsequent amendment, the department shall make available for download on its internet website translations of the notices set forth in subdivisions (a) and (d) in the new language.

history: (History: Amended by Stats. 2022, Ch. 149, Sec. 1. (SB 633) Effective January 1, 2023.)

title: 1.85. CONSUMER CREDIT CONTRACTS


kind: section

code: CIV

text:
(a) The notice required by Section 1799.91 shall be provided on a separate sheet that meets the following requirements:

(1) It shall not contain any other text except as is necessary to identify the creditor and consumer credit contract or lessor and lease to which the statement refers.

(2) It shall provide for the date and the person’s acknowledgment of receipt.

(3) It shall be attached to and precede the consumer credit contract or lease.

(b) The creditor or lessor may develop the separate sheet described in subdivision (a) so long as it conforms to the requirements of this title.

history: (History: Amended by Stats. 2022, Ch. 149, Sec. 2. (SB 633) Effective January 1, 2023.)

title: 1.85. CONSUMER CREDIT CONTRACTS

path: 1.85. CONSUMER CREDIT CONTRACTS


text:
(a) The creditor shall not obtain the signature of any person entitled to notice under Section 1799.91 if the consumer credit contract contains blank spaces to be filled in after the person’s signature has been obtained.

(b) The creditor shall give each person entitled to notice under Section 1799.91 a copy of the debt instrument and security agreement or deed of trust, if any, evidencing the consumer credit contract and, if separate therefrom, a copy of the notice required by Section 1799.91 and a copy of the document evidencing that person’s obligations.

history: (History: Amended by Stats. 1985, Ch. 987, Sec. 3.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text: The text of the statement required by Section 1799.91 of this title shall not be construed to alter or affect the rights and obligations of the parties to any consumer credit contract.

history: (History: Added by Stats. 1975, Ch. 847.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text:
No action shall be brought, nor shall any security interest be enforced, by any creditor or any assignee of a creditor on any consumer credit contract which fails to comply with this title against any person, however designated, who is entitled to notice under Section 1799.91 and who does not in fact receive any of the money, property or services which are the subject matter of the consumer credit contract.

Nothing herein shall affect the rights of any bona fide purchaser for value of property sold pursuant to the enforcement of a security interest if the purchase was made without notice of any facts constituting a violation of this title.

history: (History: Amended by Stats. 1985, Ch. 987, Sec. 4.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text: If federal law or regulations require or permit the use of a notice substantially similar to that required by Section 1799.91, the use of such federally sanctioned notice and an accurate translation thereof into the languages set forth in subdivision (b) of Section 1632 shall constitute compliance with Section 1799.91. However, the other provisions of this title shall remain unaffected.

history: (History: Amended by Stats. 2022, Ch. 149, Sec. 3. (SB 633) Effective January 1, 2023.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text:
(a) No consumer credit contract shall provide for a security interest in any religious books, religious artifacts, or religious materials, valued at less than five hundred dollars ($500), unless the religious books, artifacts, or materials are specifically pledged as collateral.

(b) Any provision in any contract which provides for a security interest in violation of subdivision (a) shall be void and unenforceable.

history: (History: Added by Stats. 1984, Ch. 732, Sec. 1.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text:
(a) Nothing in this title shall be construed to make applicable or affect or operate as a waiver of any of the provisions of any of the following:

(1) Title 13 (commencing with Section 2787) of Part 4 of Division 3 of this code.

(2) Parts 1 (commencing with Section 700), 2 (commencing with Section 760), 3 (commencing with Section 900), and 4 (commencing with Section 1100) of Division 4 of the Family Code.

(3) Sections 4301 and 4302 of the Family Code.

(b) The delivery of notice pursuant to Section 1799.91 is not evidence that the person to whom the notice was delivered entered or did not enter the transaction in the capacity of a surety.

history: (History: Amended (as amended by Stats. 1992, Ch. 163, Sec. 10) by Stats. 1993, Ch. 219, Sec. 28.5. Effective January 1, 1994.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text:
(a) This section applies to transactions, other than consumer credit contracts as defined in Section 1799.90, which are subject to 16 C.F.R. 444.3, 12 C.F.R. 227.14, or 12 C.F.R. 535.3, whichever is applicable to the creditor.

(b) Unless the persons who are obligated under the transaction are married to each other, no action shall be brought, nor shall any security interest be enforced, against any person entitled to receive notice under 16 C.F.R. 444.3, 12 C.F. R. 227.14, or 12 C.F.R. 535.3, whichever is applicable to the creditor, if that person did not receive the notice in the manner prescribed by the applicable regulation and an accurate Spanish translation of the notice.

history: (History: Amended by Stats. 1988, Ch. 160, Sec. 15.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text:
(a) It is unlawful for any person to take a security interest in any household goods, as defined in subdivision (g), in connection with a consumer credit contract or other credit obligation incurred primarily for personal, family, or household purposes unless (1) the person takes possession of the household goods or (2) the purchase price of the household goods was financed through the consumer credit contract or credit obligation.

(b) An agreement or other document creating a nonpossessory security interest in personal property as defined in subdivision (d) in connection with a consumer credit contract or other credit obligation incurred primarily for personal, family, or household purposes shall contain a statement of description reviewed and signed by the consumer indicating each specific item of the personal property in which the security interest is taken. A consumer credit contract or other credit obligation subject to the Unruh Act (Chapter 1 (commencing with Section 1801) of Title 2) that complies with the provisions of subdivision (a) of Section 1803.3, or of subdivision (f) of Section 1810.1, shall be deemed to comply with this subdivision.

(c) Notwithstanding any other provision of law, a person who has a nonpossessory security interest in personal property, described in subdivision (d), taken in connection with a consumer credit contract or other credit obligation incurred primarily for personal, family, or household purposes shall only enforce the security interest by judicial action unless the property is abandoned or freely and voluntarily surrendered by the consumer.

(d) The provisions of subdivisions (b) and (c) apply only to the following types of personal property:

(1) Any goods, as defined in paragraph (44) of subdivision (a) of Section 9102 of the Commercial Code, except for vessels, vehicles, and aircraft, that are used or bought for use primarily for personal, family, or household purposes and that has a fair market value of less than one thousand dollars ($1,000) per individual item at the time the security interest is created.

(2) The property described in Section 704.050 and subdivision (a) of Section 704.060 of the Code of Civil Procedure, except for vessels, vehicles, and aircraft.

(e) Any security interest taken in violation of either subdivision (a) or (b) is void and unenforceable.

(f) Any person injured by a violation of this section may bring a civil action for the recovery of damages, equitable relief, and attorney’s fees and costs.

(g) For the purpose of this section:

(1) “Household goods” means and includes clothing, furniture, appliances, one radio, one television, linens, china, crockery, kitchenware, personal effects, and wedding rings. “Household goods” does not include works of art, electronic entertainment equipment (except one radio and one television), items acquired as antiques, and jewelry (except wedding rings).

(2) “Antique” means any item over one hundred years of age, including such items that have been repaired or renovated without changing their original form or character.

history: (History: Amended by Stats. 1999, Ch. 991, Sec. 3.5. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text:
(a) For the purposes of this section, the following terms are defined as follows:

(1) “Adverse information” means information directly or indirectly indicating that a delinquency has occurred, because a cosigner has not complied with the contractual provisions of a consumer credit contract.

(2) “Collection action” means requesting a cosigner to pay all or part of the obligation on a consumer credit contract.

(3) “Cosigner” means a natural person, other than the primary obligor or the spouse of the primary obligor, who renders himself or herself liable for the obligation on a consumer credit contract without compensation. The term includes a person whose signature is requested by a creditor as a condition to granting credit to another person. A person who does not receive goods, services, or money in return for executing a consumer credit contract does not receive compensation within the meaning of this section. “Cosigner” does not include a joint applicant for open-end credit pursuant to subdivision (c) of Section 1799.91. A person is a cosigner within the meaning of this section whether or not he or she is designated as such on a consumer credit contract or other document creating the consumer credit contract obligation for the cosigner.

(4) “Delinquency” means a failure to make timely payment to the creditor of all or a portion of any installment under a consumer credit contract.

(5) “Notice” means a writing which describes, recites, or otherwise refers to a delinquency.

(6) “Obligation” means an indebtedness incurred by an individual for personal, family, or household purposes.

(7) “Person” means an individual, firm, partnership, association, limited liability company, or corporation.

(8) “Primary obligor” means one or more persons, other than a cosigner, who sign a consumer credit contract and assume an obligation as debtor under that contract.

(b) Except as provided in subdivisions (d) and (e), no creditor shall provide any adverse information with respect to any cosigner, to a consumer credit reporting agency regarding a delinquency on a consumer credit contract entered into on or after July 1, 1992, unless, at or before the time the information is provided to the consumer credit reporting agency, written notice of the delinquency is provided to the cosigner.

(c) No creditor shall provide any information regarding the cosigner’s obligation on a consumer credit contract to a debt collector, as defined in subdivision (c) of Section 1788.2, until notice has been provided to the cosigner under subdivision (b).

(d) The notice requirements of subdivisions (b) and (c) do not apply to any cosigner whose address, as shown in the creditor’s records respecting the consumer credit contract, is the same as the primary obligor.

(e) The notice requirements of subdivisions (b) and (c) shall be satisfied by mailing a copy of the required notice to the cosigner at the cosigner’s address, as shown in the creditor’s records respecting the consumer credit contract. However, if more than one cosigner reside at the same address, as shown in the creditor’s records respecting the consumer credit contract, a notice addressed to any cosigner at that address shall be deemed notice to all the cosigners residing at that address.

(f) Nothing in this section shall require any particular form or language with respect to a notice of delinquency sent to either a primary obligor or cosigner.

(g) Within a reasonable time after a creditor has reported to a credit reporting agency that a delinquency or delinquencies that have been reported to the consumer credit reporting agency and included in the cosigner’s file maintained by the consumer credit reporting agency have been cured, the consumer credit reporting agency shall indicate in the file that the payment was made.

(h) Nothing in this section shall be construed to require notice of a delinquency to be provided to a cosigner in any instance not expressly specified in this section, or to provide notice to persons other than cosigners.

(i) This section shall become operative on July 1, 1992.

history: (History: Amended by Stats. 1994, Ch. 1010, Sec. 42. Effective January 1, 1995.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text:
(a) A cosigner who suffers a loss as a result of a violation of Section 1799.101 may bring an action to recover actual damages or two hundred fifty dollars ($250), whichever is greater, and reasonable attorney fees.

(b) The cosigner shall, not less than 30 days prior to bringing an action pursuant to subdivision (a), notify the person alleged to have violated Section 1799. 101 of the cosigner’s intention to bring an action. The notice shall include a statement of the specific evidence that proves the loss suffered by the cosigner. If within 25 days after the date of receiving the notice, the person alleged to have violated Section 1799.101 tenders to the cosigner an amount equal to the loss, or otherwise resolves the matter to the cosigner’s satisfaction, the cosigner shall be barred from further recovery of that loss, including reasonable attorney fees.

(c) This section shall become operative on July 1, 1992.

history: (History: Added by Stats. 1990, Ch. 1549, Sec. 2. Section operative July 1, 1992, by its own provisions.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text: No consumer credit contract or guarantee of a consumer credit contract shall provide for a security interest in any investment property, as defined in paragraph (49) of subdivision (a) of Section 9102 of the Commercial Code, that is pledged as collateral, unless (a) the contract either specifically identifies the investment property as collateral or (b) the secured party is a securities intermediary, as defined in paragraph (14) of subdivision (a) of Section 8102 of the Commercial Code, or commodity intermediary, as defined in paragraph (17) of subdivision (a) of Section 9102 of the Commercial Code, with respect to the investment property. The identification of an account shall include the name of the holder, account number, and name of the institute holding the investment property. In the event that a consumer credit contract or guarantee does not comply with this section, the security interest in the investment property is void.

history: (History: Amended by Stats. 1999, Ch. 991, Sec. 4. Effective January 1, 2000. Operative July 1, 2001, by Sec. 75 of Ch. 991.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text: Any waiver of the provisions of this title is contrary to public policy, and is void and unenforceable.

history: (History: Added by Stats. 2002, Ch. 815, Sec. 19. Effective January 1, 2003.)

title: 1.85. CONSUMER CREDIT CONTRACTS


text: This title shall be known and may be cited as the Consumer Contract Awareness Act of 1990.

history: (History: Added by Stats. 1990, Ch. 1079, Sec. 1. Operative July 1, 1991, by Sec. 3 of Ch. 1079.)

title: 1.86. CONSUMER CONTRACT AWARENESS ACT OF 1990


text:
As used in this title:

(a) “Consumer” means a natural person who has entered into a consumer contract with a seller.

(b) “Consumer contract” means a writing prepared by a seller and, except as provided in subdivision (c) of Section 1799.202, signed, or to be signed, by a consumer, which provides (1) for the sale or lease of goods or services that are purchased or leased primarily for personal, family, or household purposes, or (2) for extension of credit, the proceeds of which are used primarily for personal, family, or household purposes. Without affecting the enforceability of any incidental provision contained therein, an application for credit shall not be considered to be a consumer contract for purposes of this section even if it contains incidental provisions, such as the consumer’s consent to a credit review, a certification of the accuracy of the information furnished, or the consumer’s agreement to the terms that will be furnished to the consumer pursuant to this title.

(c) “Consumer contract guaranty” means a writing prepared by a seller and signed, or to be signed, by a guarantor which guarantees the obligation of a consumer under a consumer contract.

(d) “Copy” means a reproduction, facsimile, or duplicate.

(e) “Days” means calendar days.

(f) “Goods” means tangible and intangible personal property.

(g) “Guarantor” means a person who guarantees the obligation of a consumer under a consumer contract by signing a consumer contract guaranty.

(h) “Seller” means a person who has entered into a consumer contract with a consumer.

(i) “Services” means work, labor, and services, including depository services and other banking services.

(j) “Financial institution” means any commercial bank, trust company, savings and loan association, credit union, industrial loan company, insurance company, or person engaged in the business of lending money.

history: (History: Amended by Stats. 1992, Ch. 879, Sec. 1. Effective January 1, 1993.)

path: 1.86. CONSUMER CONTRACT AWARENESS ACT OF 1990


text:
(a) Except as otherwise provided in this title, a seller shall deliver a copy of a consumer contract to the consumer at the time it is signed by the consumer if the consumer contract is signed at a place of business of the seller. If the consumer contract is not signed by the consumer at a place of business of the seller, and the seller has not provided a copy of the consumer contract for the consumer which the consumer is instructed to keep, the seller shall mail or deliver a copy of it to the consumer within 10 calendar days after the seller receives the signed consumer contract. In any case, the copy of the contract provided to the consumer shall not contain any blank spaces to be completed after the consumer signs the contract, shall contain the signature of the seller if it provides for that signature, and may also contain the signature of the consumer.

(b) A seller that is a financial institution need not deliver to the consumer, pursuant to subdivision (a), any writing which the consumer contract incorporates by reference if either of the following conditions apply:

(1) The writing was previously delivered or mailed to the consumer.

(2) The writing was not prepared by the seller.

(c) If the consumer contract (1) is wholly or partly contained on a card or other writing which is used to identify the consumer in connection with a deposit account, safe deposit box, safekeeping agreement, or other service offered by a financial institution, and (2) contains information particular to the consumer’s account, box, or other arrangement that, if known by a third party, could be used by the third party to cause loss to the consumer or financial institution, the copy of the contract furnished to the consumer need not contain the consumer’s signature or any of the identifying information particular to the consumer’s account, box, or other arrangement.

For purposes of this subdivision, a document which includes the same terms as those contained in the consumer contract shall be deemed a copy.

(d) Within a reasonable time after receipt of a written request from a consumer, a seller or financial institution shall mail a copy of the consumer’s completed consumer credit application, which may, but need not, contain any information completed or added by the seller or financial institution, to the consumer at the address indicated on the request. By making a written request, the consumer shall conclusively be deemed to have waived any action against the seller or financial institution, as well as its employees or agents, on any theory, at law or in equity, arising directly or indirectly out of the mailing or other delivery of the copy, including any information added to the application by the seller or financial institution and included in the copy. The seller or financial institution may specify the address to which such a request may be sent, may charge the consumer a reasonable copying fee, and shall not be obligated to provide the copy until the fee is paid.

history: (History: Amended by Stats. 1992, Ch. 879, Sec. 2. Effective January 1, 1993.)


text:
(a) It shall be deemed compliance with Section 1799.202 if a copy of any consumer contract which is subject to Article 10 (commencing with Section 1810.1) of Chapter 1 of Title 2, or which is an open-end consumer credit plan subject to Section 127 of the federal Truth in Lending Act (15 U.S.C. 1637), is delivered or mailed to the consumer before the consumer enters into a transaction covered and permitted by the consumer contract.

(b) Section 1799.202 does not apply to any of the following:

(1) A consumer contract for the purchase of goods by mail if the seller permits the consumer to examine the goods for seven calendar days and cancel the consumer contract and receive a full refund within 30 calendar days for returned unused and undamaged goods.

(2) A written contract created by, and consisting of, an exchange of letters by mail.

(3) Any consumer contract which is required to be mailed or delivered at a time prescribed by another law of this state or the United States.

history: (History: Amended by Stats. 1991, Ch. 1129, Sec. 3.)


text: If more than one consumer has signed a consumer contact, the seller may comply with Section 1799.202 by mailing or delivering the copy to any one of the consumers who reside at the same address. A copy shall also be mailed or delivered to any other consumer who has signed the consumer contract and who does not reside at the same address.


text:
(a) A seller who fails to comply with Section 1799.202 is liable to the consumer for any actual damages suffered by the consumer as the result of that failure. The remedy provided by this subdivision is nonexclusive and is in addition to any other remedies or penalties available under other laws of this state.

(b) Failure to comply with Section 1799.202 does not create an independent basis for the rescission, but is admissible to establish a basis for the rescission of the contract otherwise authorized by law.

history: (History: Amended by Stats. 1991, Ch. 1129, Sec. 4.)


text:
(a) Except as otherwise provided in this section, a seller shall deliver a copy of the consumer contract guaranty to the guarantor at the time the consumer contract guaranty is signed by the guarantor if the consumer contract guaranty is signed by the guarantor at a place of business of the seller. If the consumer contract guaranty is not signed by the guarantor at a place of business of the seller, and the seller has not provided a copy of the consumer contract guaranty for the guarantor which the guarantor is able to keep, the seller shall mail or deliver a copy of the consumer contract guaranty to the guarantor within 10 calendar days after the seller receives the signed consumer contract guaranty. In any case, the copy of the consumer contract guaranty provided to the guarantor shall not contain any blank spaces to be completed after the guarantor signs the guaranty, shall contain the signature of the seller if it provides for that signature, and may also contain the signature of the guarantor.

(b) If more than one guarantor has signed the consumer contract guaranty, the seller may comply with subdivision (a) by mailing or delivering the copy to any one of the guarantors who reside at the same address. A copy shall also be mailed or delivered to any guarantor who has signed the consumer contract guaranty and who does not reside at the same address.

(c) A seller that fails to comply with this section is liable to the guarantor for any actual damages suffered by the guarantor as the result of that failure. The remedy provided by this subdivision is nonexclusive and in addition to any other remedies or penalties available under other laws of this state.

(d) Failure to comply with this section does not create a new basis for rescission, but is admissible to establish a basis for rescission of the consumer contract guaranty otherwise authorized by law.

history: (History: Amended by Stats. 1992, Ch. 879, Sec. 3. Effective January 1, 1993.)


history: (History: Added by Stats. 2002, Ch. 815, Sec. 20. Effective January 1, 2003.)


text:
(a) A seller shall not require a consumer to agree to a provision that would do either of the following:

(1) Require the consumer to arbitrate outside of California a claim arising in California.

(2) Require the consumer to arbitrate a controversy arising in California under the substantive law of a state other than California.

(b) Any provision of a contract that violates subdivision (a) is voidable by the consumer, and if a provision is rendered void at the request of the consumer, the matter shall be adjudicated in California and California law shall govern the dispute.

(c) In addition to injunctive relief and any other remedies available, a court may award a consumer who is enforcing their rights under this section reasonable attorney’s fees incurred in enforcing those rights.

(d) For purposes of this section, adjudication includes litigation and arbitration.

(e) This section applies to a contract entered into, modified, or extended on or after January 1, 2025.

history: (History: Added by Stats. 2024, Ch. 986, Sec. 2. (SB 940) Effective January 1, 2025.)


text:
(a) If a consumer contract requires a dispute under the contract to be arbitrated and the dispute may be adjudicated pursuant to the Small Claims Act (Chapter 5.5 (commencing with Section 116.110) of Title 1 of Part 1 of the Code of Civil Procedure), the consumer shall be given the option to have the dispute adjudicated pursuant to that act.

(b) This section applies to a contract entered into, modified, or extended on or after January 1, 2025.

history: (History: Added by Stats. 2024, Ch. 986, Sec. 3. (SB 940) Effective January 1, 2025.)


text:
For purposes of this title, the following definitions apply:

(a) “Automated clearinghouse” means any federal reserve bank, or an organization established in agreement with the National Automated Clearing House Association, that operates as a clearinghouse for transmitting or receiving entries between banks or bank accounts and authorizes an electronic transfer of funds between these banks or bank accounts.

(b) (1) “Broker” means a person who is engaged in the business of performing any of the following acts in connection with commercial financing made by a provider:

(A) Transmitting confidential data about a prospective recipient to a provider with the expectation of compensation in connection with making a referral.

(B) Making a referral to a provider under an agreement with the provider that a prospective recipient referred by the person to the provider meet certain criteria involving confidential data.

(C) Participating in a negotiation of commercial financing between a provider and prospective recipient.

(D) Counseling, advising, or making recommendations to a prospective recipient about a commercial financing transaction based on the prospective recipient’s confidential data.

(E) (i) Participating in the preparation of any commercial financing documents, including, but not limited to, commercial financing applications, other than providing a prospective recipient blank copies of commercial financing documents.

(ii) Notwithstanding clause (i), transmitting information that is not confidential data to a provider at the request of a prospective recipient shall not, by itself, constitute participation in the preparation of commercial financing documents.

(F) Communicating to a prospective recipient a provider’s approval decisions related to a commercial financing transaction.

(G) Charging a fee to a prospective recipient for any services related to a prospective recipient’s application for a commercial financing transaction from a provider.

(2) Notwithstanding paragraph (1), a person is not a “broker” under this title solely because they take any of the following acts:

(A) Performing support tasks, including, but not limited to, typing, word processing, data entry, filing, billing, answering phone calls, taking and receiving messages, and scheduling, in support of the performance by a broker of any of the activities described in subparagraphs (E) to (G), inclusive, of paragraph (1).

(B) Furnishing a consumer report to a covered entity by a consumer reporting agency in accordance with subsection (a) or (c) of Section 1681b of Title 15 of the United States Code.

(C) Furnishing a consumer credit report, as defined in Section 1785.3, to a covered entity by a consumer credit reporting agency in accordance with subdivision (a) or paragraph (1) of subdivision (b) of Section 1785.11.

(D) Furnishing a prequalifying report, as defined in Section 1785.3, to a covered entity by a consumer credit reporting agency in accordance with paragraph (2) of subdivision (b) of Section 1785.11.

(E) Distributing or disseminating to a prospective recipient of a provider’s marketing materials or factual information about the provider, its lending activities, or its loan products, including, but not limited to, the provider’s interest rates, the provider’s minimum or maximum loan amounts or loan periods, or a general description of the provider’s underwriting criteria.

(c) “Commercial financing” has the same meaning as defined in Section 22800 of the Financial Code.

(d) “Confidential data” means any of the following:

(1) A bank account number.

(2) A bank statement.

(3) A credit or debit card account number.

(4) A credit score, as defined in Section 1785.15.1.

(5) All or a portion of a social security number.

(6) Personal or business income information, including information self-reported by the person.

(7) A taxpayer or employer identification number.

(e) “Covered entity” means either of the following:

(1) A provider.

(2) A broker.

(f) “Depository institution” means any of the following:

(1) A bank, trust company, or industrial loan company doing business under the authority of, or in accordance with, a license, certificate, or charter issued by the United States, this state, or any other state, district, territory, or commonwealth of the United States that is authorized to transact business in this state.

(2) A federally chartered savings and loan association, federal savings bank, or federal credit union that is authorized to transact business in this state.

(3) A savings and loan association, savings bank, or credit union organized under the laws of this or any other state that is authorized to transact business in this state.

(g) “Provider” means a person who extends a specific offer of commercial financing to a recipient, including, but not limited to, a nondepository institution that enters into a written agreement with a depository institution to arrange for the extension of commercial financing by the depository institution to a recipient via an online lending platform administered by the nondepository institution. The fact that a provider extends a specific offer of commercial financing or lending on behalf of a depository institution shall not be construed to mean that the provider engaged in lending or originated that loan or financing.

(h) “Recipient” means a person who is presented a specific commercial financing offer by a provider that is equal to or less than five hundred thousand dollars ($500,000).

(i) “Referral” means the introduction of a prospective recipient to a provider or the delivery of a prospective recipient’s contact information to a provider for the purpose of making an introduction.

(j) “Small business” means an independently owned and operated business that is not dominant in its field of operation, the principal office of which is located in California, the officers of which are domiciled in California, and that, together with affiliates, has 100 or fewer employees and average annual gross receipts of fifteen million dollars ($15,000,000) or less over the previous three years.

history: (History: Added by Stats. 2023, Ch. 881, Sec. 1. (SB 666) Effective January 1, 2024.)

title: 1.90. Commercial Financing Transactions with Small Businesses


text:
This title does not apply to any of the following:

(a) A provider that is a depository institution.

(b) A provider that is a lender regulated under the federal Farm Credit Act of 1971 (12 U.S.C. Sec. 2001 et seq.).

(c) A commercial financing transaction secured by real property.

(d) A person who makes no more than one commercial financing transaction in California in a 12-month period.

(e) A person who makes five or fewer commercial financing transactions in California in a 12-month period that are incidental to the business of that person.

(f) A commercial financing transaction in which the recipient is a dealer, as defined by Section 285 of the Vehicle Code, or an affiliate of the dealer, pursuant to a specific commercial financing offer or commercial open-end credit plan of at least fifty thousand dollars ($50,000), including, but not limited to, a commercial loan made pursuant to that commercial financing transaction.

(g) A commercial financing transaction in which the recipient is a vehicle rental company, or an affiliate of the vehicle rental company, pursuant to a specific commercial financing offer or commercial open-end credit plan of at least fifty thousand dollars ($50,000), including, but not limited to, a commercial loan made pursuant to that commercial financing transaction.

path: 1.90. Commercial Financing Transactions with Small Businesses


text:
A covered entity shall not charge any of the following in connection with a commercial financing transaction with a small business or small business owner:

(a) A fee for accepting or processing a payment required by the terms of the commercial financing contract as an automated clearinghouse transfer debit, except for a fee imposed for a payment by an automated clearinghouse transfer that fails because of insufficient funds in the transferor’s account.

(b) A fee for providing a small business with documentation prepared by the covered entity that contains a statement of the amount due to satisfy the remaining amount owed, including, but not limited to, interest accrued to the date the statement is prepared and a means of calculating per diem interest accruing thereafter.

(c) A fee in addition to an origination fee that does not have a clear corresponding service provided for the fee, including, but not limited to, a risk assessment, due diligence, or platform fee.

(d) (1) A fee for monitoring the small business’ collateral.

(2) Paragraph (1) does not apply if any of the following are true:

(A) The commercial financing transaction is an asset-based loan or factoring, and the fee is intended to compensate the covered entity for actions taken to validate the collateral with the intended purpose of maximizing the amount of financing provided to the small business or small business owner under the financing contract pursuant to which the fee is charged.

(B) The fee is expressed as a dollar amount or a percentage of an identifiable base, and the fee is deemed a finance charge, as described in Section 943 of Subchapter 3 of Chapter 3 of Title 10 of the California Code of Regulations.

(C) The commercial financing transaction is delinquent for more than 60 days.

(e) A fee for filing or terminating a lien filed in accordance with the provisions of the Uniform Commercial Code against the business’ assets that exceeds 150 percent of the cost of the filing or termination.

history: (History: Amended by Stats. 2024, Ch. 194, Sec. 1. (SB 1521) Effective January 1, 2025.)


text:
(a) If a covered entity violates Section 1799.302, the recipient shall be entitled to all of the following relief:

(1) Actual damages sustained as a result of the violation, including, but not limited to, the amount of fees paid by the recipient that are prohibited by Section 1799.302.

(2) Statutory damages of at least five hundred dollars ($500) but not greater than two thousand five hundred dollars ($2,500).

(3) Injunctive relief.

(4) Attorney’s fees and costs.

(5) Any other relief that the court deems proper.

(b) A court may award a covered entity that is the prevailing party in an action brought pursuant to this section reasonable attorney’s fees upon a finding that the recipient brought the action in bad faith.


text: A waiver of the provisions of this title is contrary to public policy and is void and unenforceable.


citation: CIV § 1801

text: This chapter may be cited as the “Unruh Act.”

history: (History: Added by Stats. 1959, Ch. 201.)

title: 2. CREDIT SALES

chapter: 1. Retail Installment Sales

article: 1. General Provisions

path: 2. CREDIT SALES > 1. Retail Installment Sales > 1. General Provisions


text: Any waiver by the buyer of the provisions of this chapter shall be deemed contrary to public policy and shall be unenforceable and void.

history: (History: Amended by Stats. 1963, Ch. 1603.)

title: 2. CREDIT SALES

article: 1. General Provisions


text: If any provisions of this chapter or the application thereof to any person or circumstances is held unconstitutional, the remainder of the chapter and the application of such provision to other persons or circumstances shall not be affected thereby.

title: 2. CREDIT SALES

article: 1. General Provisions


text: The provisions of this chapter shall not apply to any contract or series of contracts providing for: (a) the construction, sale, or construction and sale of an entire residence, including a mobilehome, or all or part of a structure designed for commerical or industrial occupancy, with or without a parcel of real property or an interest therein, (b) for the sale of a lot or parcel of real property, including any site preparation incidental to such sale, (c) the sale of any aircraft required to be registered under the Federal Aviation Act of 1958, or (d) the sale of any vessel as defined in subdivision (a) of Section 9840 of the Vehicle Code if the cash price of such vessel, including accessories and equipment sold in conjunction therewith, exceeds twenty-five thousand dollars ($25,000).

history: (History: Amended by Stats. 1980, Ch. 1149, Sec. 6.)

title: 2. CREDIT SALES

article: 1. General Provisions


text: Notwithstanding any other provision of this chapter to the contrary, any information required to be disclosed in a retail installment contract or other document under this chapter may be disclosed in any manner, method, or terminology required or permitted under Regulation Z, as in effect at the time such disclosure is made, except that permitted by paragraph (2) of subdivision (c) of Section 226.18 of Regulation Z, provided that all of the requirements and limitations set forth in subdivision (b) of Section 1803.3 are satisfied. Nothing contained in this chapter shall be deemed to prohibit the disclosure in such contract or other document of additional information required or permitted under Regulation Z, as in effect at the time such disclosure is made.

history: (History: Amended by Stats. 1981, Ch. 1075, Sec. 1. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

title: 2. CREDIT SALES

article: 1. General Provisions


text:
(a) The Legislature finds that the decisional law of this state regarding the characterization of credit transactions as either loans or credit sales has been made unclear by the holding in King v. Central Bank, 18 Cal. 3d 840. It is the purpose of subdivision (b) to clarify such law by establishing standards for determining whether a transaction is subject to the Unruh Act. However, subdivision (b) is not intended to abrogate the judicial principle that the substance of a transaction rather than its form is determinative of its characterization as a loan or credit sale as exemplified by such decisions as Verbeck v. Clymer, 202 Cal. 557, Milana v. Credit Discount Co., 27 Cal. 2d 335, and Boerner v. Colwell Co., 21 Cal. 3d 37. Subdivision (b) also is not intended to abrogate the decision in Morgan v. Reasor Corp., 69 Cal. 2d 881, to the extent such decision has not been modified by Chapter 554 of the Statutes of 1969 or other legislative amendments to the Unruh Act.

(b) The provisions of this chapter shall not apply to any transaction in the form of a loan made by a supervised financial organization to a buyer of goods or services where all or a portion of the loan proceeds are used to purchase such goods or services, whether or not the seller of such goods or services arranges the loan or participates in the preparation of the loan documents, unless the supervised financial organization and the seller:

(1) Are related by common ownership and control and the relationship was a material factor in the loan transaction; or

(2) Share in the profits and losses of either or both the sale and the loan.

(c) For purposes of this section:

(1) The term “supervised financial organization” means a person organized, chartered, or holding a license or authorization certificate to make loans pursuant to the laws of this state or the United States who is subject to supervision by an official or agency of this state or the United States.

(2) Receipt of a loan commission, brokerage or referral fee by a seller from a supervised financial organization shall not constitute a sharing of profits of the supervised financial organization, provided that such payment (i) is reasonable under the circumstances existing at the time the loan is consummated, and (ii) is not refundable or is wholly or partly refundable only if the loan is voluntarily paid in full prior to its scheduled maturity. For purposes of this paragraph, a loan commission, brokerage or referral fee not exceeding the greater of 1 percent of the amount financed (as that term is defined by Regulation Z with respect to loans), or twenty dollars ($20), is reasonable under the circumstances existing at the time the loan is consummated.

(3) Payment of money by a seller to a supervised financial organization pursuant to an actual or alleged contractual or statutory obligation to indemnify a supervised financial organization for losses incurred as a result of the assertion by a buyer of claims or defenses with respect to goods or services purchased with loan proceeds shall not constitute participation in or sharing of loan losses by the seller.

history: (History: Amended by Stats. 1980, Ch. 438, Sec. 1.)

title: 2. CREDIT SALES

article: 1. General Provisions


text: The provisions of this chapter shall not apply to any premium finance agreement entered into by an industrial loan company pursuant to Chapter 8 (commencing with Section 18560) of Division 7 of the Financial Code.

history: (History: Added by Stats. 1979, Ch. 1151.)

title: 2. CREDIT SALES

article: 1. General Provisions


citation: CIV § 1802

text: Unless the context or subject matter otherwise requires, the definitions given in this article govern the construction of this chapter.

title: 2. CREDIT SALES

article: 2. Definitions

path: 2. CREDIT SALES > 1. Retail Installment Sales > 2. Definitions


text: “Goods” means tangible chattels bought for use primarily for personal, family or household purposes, including certificates or coupons exchangeable for such goods, and including goods which, at the time of the sale or subsequently are to be so affixed to real property as to become a part of such real property whether or not severable therefrom, but does not include any vehicle required to be registered under the Vehicle Code, nor any goods sold or leased with such a vehicle if sold under a contract governed by Section 2982 or leased under a contract governed by Section 2985.7. “Goods” also includes a trailer which is sold in conjunction with a vessel, as defined in subdivision (a) of Section 9840 of the Vehicle Code, unless the sales transaction is exempted under Section 1801.4. As used in this section, “trailer” means a vehicle designed solely for carrying vessels.

history: (History: Amended by Stats. 1985, Ch. 1186, Sec. 1.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Services” means work, labor and services, for other than a commercial or business use, including services furnished in connection with the sale or repair of goods as defined in Section 1802.1 or furnished in connection with the repair of motor vehicles (except for service contracts as defined by subdivision (p) of Section 2981 which are sold in conjunction with the sale or lease of a vehicle required to be registered under the Vehicle Code) or in connection with the improvement of real property or the providing of insurance, but does not include the services of physicians or dentists, nor services for which the tariffs, rates, charges, costs or expenses, including in each instance the deferred payment price, are required by law to be filed with and approved by the federal government or any official, department, division, commission or agency of the United States.

history: (History: Amended by Stats. 1984, Ch. 1114, Sec. 2.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Retail seller” or “seller” means a person engaged in the business of selling goods or furnishing services to retail buyers.

title: 2. CREDIT SALES

article: 2. Definitions


text: “Retail buyer” or “buyer” means a person who buys goods or obtains services from a retail seller in a retail installment sale and not principally for the purpose of resale.

title: 2. CREDIT SALES

article: 2. Definitions


text: “Retail installment sale” or “sale” means the sale of goods or the furnishing of services by a retail seller to a retail buyer for a deferred payment price payable in installments.

history: (History: Amended by Stats. 1970, Ch. 546.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Retail installment contract” or “contract” means any contract for a retail installment sale between a buyer and seller, entered into or performed in this state, which provides for (a) repayment in installments, whether or not such contract contains a title retention provision, and in which the buyer agrees to pay a finance charge, or in which the buyer does not agree to pay a finance charge but the goods or services are available at a lesser price if paid for by either cash or credit card, or in which the buyer would have received any additional goods or services or any higher quality goods or services at no added cost over the total amount payable in installments if the sale had been for cash, or (b) which provides for payment in more than four installments. When taken or given in connection with a retail installment sale, the term includes but is not limited to a security agreement and a contract for the bailment or leasing of goods by which the bailee or lessee contracts to pay as compensation for their use a sum substantially equivalent to or in excess of their value and by which it is agreed that the bailee or lessee will become, or for no other or for a nominal consideration has the option of becoming, the owner of the goods upon full compliance with the terms of the contract.

history: (History: Amended by Stats. 1979, Ch. 805.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Retail installment account” or “installment account” or “revolving account” means an account established by an agreement entered into in this state, pursuant to which the buyer promises to pay, in installments, to a retail seller, his outstanding balance incurred in retail installment sales, whether or not a security interest in the goods sold is retained by the seller, and which provides for a finance charge which is expressed as a percent of the periodic balances to accrue thereafter providing such charge is not capitalized or stated as a dollar amount in such agreement.

title: 2. CREDIT SALES

article: 2. Definitions


text: “Cash price” means the cash price stated in a retail installment contract for which the seller would sell or furnish to the buyer and the buyer would buy or obtain from the seller the goods or services which are the subject matter of a retail installment contract if the sale were a sale for cash instead of a retail installment sale. The cash price shall include any taxes and cash prices for accessories and services, if any, included in a retail installment sale.

history: (History: Amended by Stats. 1981, Ch. 1075, Sec. 2. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Total sale price” means the total of the cash price of the goods or services, the amounts, if any, included for insurance, official fees, and the finance charge.

history: (History: Amended by Stats. 1981, Ch. 1075, Sec. 3. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Finance charge” means the amount however denominated or expressed which the retail buyer contracts to pay or pays for the privilege of purchasing goods or services to be paid for by the buyer in installments. “Finance charge” does not include the amounts, if any, charged for insurance premiums, including premiums of the kind and to the extent described in paragraph (2) of subsection (e) of Section 226.4 of Regulation Z, delinquency charges, attorney’s fees, court costs, collection expenses, official fees, extension or deferral agreement charges as provided by Section 1807.1, or amounts for insurance, repairs to or preservation of the goods, or preservation of the holder’s security interest therein advanced by the holder subsequent to the execution of a contract.

history: (History: Amended by Stats. 1984, Ch. 199, Sec. 1.)

title: 2. CREDIT SALES

article: 2. Definitions


text:
(a) “Amount financed” means the amount required to be disclosed pursuant to paragraph (7) of subdivision (c) of Section 1803.3.

(b) “Unpaid balance” means the cash price of the goods or services which are the subject matter of the retail installment sale, plus the amounts, if any, included in a retail installment sale for insurance and official fees, minus the amount of the buyer’s downpayment in money or goods.

history: (History: Amended by Stats. 1981, Ch. 1075, Sec. 4. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Total of payments” means the amount required to be disclosed pursuant to subdivision (h) of Section 226.18 of Regulation Z. The term includes any portion of the downpayment deferred until not later than the second otherwise scheduled payment and which is not subject to a finance charge.

history: (History: Amended by Stats. 1981, Ch. 1075, Sec. 5. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Holder” means the retail seller who acquires a retail installment contract or installment account executed, incurred or entered into by a retail buyer, or if the contract or installment account is purchased by a financing agency or other assignee, the financing agency or other assignee. The term does not include the pledgee of or the holder of a security interest in an aggregate number of such contracts or installment accounts to secure a bona fide loan thereon.

title: 2. CREDIT SALES

article: 2. Definitions


text: “Official fees” means the fees required by law and actually to be paid to the appropriate public officer to perfect a lien or other security interest, on or in goods, retained or taken by a seller under a retail installment contract or installment account, and license, certificate of title, and registration fees imposed by law.

title: 2. CREDIT SALES

article: 2. Definitions


text: “Person” means an individual, partnership, corporation, limited liability company, association or other group, however organized.

history: (History: Amended by Stats. 1994, Ch. 1010, Sec. 43. Effective January 1, 1995.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Financing agency” means a person engaged in this State in whole or in part in the business of purchasing retail installment contracts, or installment accounts from one or more retail sellers. The term includes but is not limited to a bank, trust company, private banker, or investment company, if so engaged.

title: 2. CREDIT SALES

article: 2. Definitions


text: “Billing cycle” means the time interval between regular monthly billing statement dates.

history: (History: Repealed and added by Stats. 1970, Ch. 546.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Regulation Z” means any rule, regulation, or interpretation promulgated by the Board of Governors of the Federal Reserve System (“Board”) under the Federal Truth in Lending Act, as amended (15 U.S.C. 1601, et seq.), and any interpretation or approval issued by an official or employee of the Federal Reserve System duly authorized by the board under the Truth in Lending Act, as amended, to issue such interpretations or approvals.

title: 2. CREDIT SALES

article: 2. Definitions


text:
(a) For the purposes of this chapter, a retail installment contract, contract, retail installment account, installment account, or revolving account shall be deemed to have been made in this state and, therefore, subject to the provisions of this chapter, if either the seller offers or agrees in this state to sell to a buyer who is a resident of this state or if such buyer accepts or makes the offer in this state to buy, regardless of the situs of the contract as specified therein.

(b) Any solicitation or communication to sell, oral or written, originating outside of this state, but forwarded to, and received in this state by, a buyer who is a resident of this state, shall be deemed to be an offer or agreement to sell in this state.

(c) Any solicitation or communication to buy, oral or written, originating within this state, from a buyer who is a resident of this state, but forwarded to, and received by, a retail seller outside of this state, shall be deemed to be an acceptance or offer to buy in this state.

history: (History: Added by Stats. 1976, Ch. 508.)

title: 2. CREDIT SALES

article: 2. Definitions


text:
“Simple-interest basis” means the determination of a finance charge, other than an administrative finance charge, by applying a constant rate to the unpaid balance as it changes from time to time, either:

(a) Calculated on the basis of a 365-day year and actual days elapsed (although the seller may, but need not, adjust its calculations to account for leap years); reference in this chapter to the “365-day basis” shall mean this method of determining the finance charge, or

(b) For contracts entered into prior to January 1, 1988, calculated on the basis of a 360-day year consisting of 12 months of 30 days each and on the assumption that all payments will be received by the seller on their respective due dates; reference in this chapter to the “360-day basis” shall mean this method of determining the finance charge.

history: (History: Added by Stats. 1979, Ch. 805.)

title: 2. CREDIT SALES

article: 2. Definitions


text: “Precomputed basis” means the determination of a finance charge by multiplying the original unpaid balance of the contract by a rate and multiplying that product by the number of payment periods elapsing between the date on which the finance charge begins to be assessed and the date of the last scheduled payment.

title: 2. CREDIT SALES

article: 2. Definitions


text: A retail installment contract shall be dated and in writing; the printed portion thereof shall be in at least eight-point type.

history: (History: Added by Stats. 1959, Ch. 201.)

title: 2. CREDIT SALES

path: 2. CREDIT SALES > 1. Retail Installment Sales > 3. Provisions of Retail Installment Contracts


text:
Except as provided in Section 1808.3, every retail installment contract shall be contained in a single document that shall contain:

(a) The entire agreement of the parties with respect to the cost and terms of payment for the goods and services, including any promissory notes or any other evidences of indebtedness between the parties relating to the transaction.

(b) (1) At the top of the contract the words “Security Agreement” shall appear in at least 12-point bold type where a security interest in the goods is retained or a security interest on other goods or realty is obtained by the seller as security for the goods or services purchased.

(2) At the top of the contract the words “Retail Installment Contract” shall appear in at least 12-point bold type where a security interest is not retained or obtained by the seller as security for the goods or services purchased.

(3) Any contract for goods or services that provides for a security interest in real property shall also provide the following notice, written in the same language, e.g., Spanish, as used in the contract: “WARNING TO BUYER: IF YOU SIGN THIS CONTRACT, YOU WILL BE PUTTING UP YOUR HOME AS SECURITY. THIS MEANS THAT YOUR HOME COULD BE SOLD WITHOUT YOUR PERMISSION AND WITHOUT ANY COURT ACTION IF YOU MISS ANY PAYMENT AS REQUIRED BY THIS CONTRACT.” This notice shall be printed in at least 14-point boldface type, shall be set apart from the rest of the contract by a border, and shall appear directly above the space reserved for the signature of the buyer. A security interest created in any contract described in this paragraph that does not provide the notice as required by this paragraph shall be void and unenforceable.

As used in this subdivision, the term “security interest” refers to a contractual interest in property and not to a mechanic’s lien or other interest in property arising by operation of law.

(c) Where the contract includes a finance charge that is determined on the precomputed basis and provides that the unearned portion of the finance charge to be refunded upon full prepayment of the contract is to be determined by a method other than actuarial, a notice in at least 10-point bold type if the contract is printed reading as follows: “Notice to buyer: (1) Do not sign this agreement before you read it or if it contains any blank spaces to be filled in. (2) You are entitled to a completely filled-in copy of this agreement. (3) You can prepay the full amount due under this agreement at any time and obtain a partial refund of the finance charge if it is $1 or more. Because of the way the amount of this refund will be figured, the time when you prepay could increase the ultimate cost of credit under this agreement. (4) If you desire to pay off in advance the full amount due, the amount of the refund you are entitled to, if any, will be furnished upon request.”

(d) Where the contract includes a finance charge that is determined on the precomputed basis and provides for the actuarial method for computing the unearned portion of the finance charge upon prepayment in full, a notice in at least 10-point bold type if the contract is printed reading as follows: “Notice to buyer: (1) Do not sign this agreement before you read it or if it contains any blank spaces to be filled in. (2) You are entitled to a completely filled-in copy of this agreement. (3) You can prepay the full amount due under this agreement at any time and obtain a partial refund of the finance charge if it is $1 or more. (4) If you desire to pay off in advance the full amount due, the amount of the refund you are entitled to, if any, will be furnished upon request.”

(e) Where the contract includes a finance charge that is determined on the simple-interest basis, a notice in at least 10-point bold type if the contract is printed reading as follows: “Notice to buyer: (1) Do not sign this agreement before you read it or if it contains any blank spaces to be filled in. (2) You are entitled to a completely filled-in copy of this agreement. (3) You can prepay the full amount due under this agreement at any time. (4) If you desire to pay off in advance the full amount due, the amount which is outstanding will be furnished upon request.”

(f) This section shall become operative on October 1, 1995.

(g) The form specified in this section may be used before October 1, 1995, to comply with the provisions of this section as amended and repealed by Section 2 of Chapter 888 of the Statutes of 1994.

history: (History: Amended (as added by Stats. 1994, Ch. 888, Sec. 3) by Stats. 1995, Ch. 153, Sec. 1. Effective July 24, 1995. Section operative October 1, 1995, by its own provisions.)

title: 2. CREDIT SALES

article: 3. Provisions of Retail Installment Contracts


text:
Except as provided in Article 8 (commencing with Section 1808.1) of this chapter, a contract shall contain the following:

(a) The names of the seller and the buyer, the place of business of the seller, the residence or place of business of the buyer as specified by the buyer and a description of the goods or services sufficient to identify them. Services or multiple items of goods may be described in general terms and may be described in detail sufficient to identify them in a separate writing.

(b) Every contract subject to this chapter shall contain the disclosures required by Regulation Z whether or not Regulation Z applies to the transaction. In addition, to the extent applicable, the contract shall contain the other disclosures and notices required by, and shall satisfy the requirements and limitations of, this section. The disclosures required by subdivision (c) may be itemized or subtotaled to a greater extent than as required by that subdivision and shall be made together and in the sequence set forth in that subdivision. No particular terminology is required to disclose the items set forth in subdivision (c) except as therein expressly provided. Except as otherwise provided by this subdivision (b), these disclosures and notices may appear in the contract in any location or sequence and may be combined or interspersed with other provisions of the contract.

(c) The contract shall contain the following disclosures, as applicable, which shall be labeled “itemization of the amount financed”:

(1) (A) The cash price, exclusive of taxes imposed on the sale.

(B) Taxes imposed on the sale.

(C) The total of the above.

(2) An itemization of the amount to be paid to any public officer for official fees.

(3) The aggregate amount of premiums agreed, upon execution of the contract, to be paid for policies of insurance included in the contract, excluding the amount of any insurance premium included in the finance charge.

(4) A subtotal representing the sum of the foregoing items.

(5) The amount of the buyer’s downpayment, which downpayment shall not include any administrative finance charge charged, received, or collected by the seller pursuant to subdivision (c) of Section 1805.1 and as shown as item (6), itemized to show the following:

(A) The net agreed value of the property being traded in.

(B) The amount of any portion of downpayment to be deferred until not later than the due date of the second regularly scheduled installment under the contract and which is not subject to a finance charge.

(C) The amount of any manufacturer’s rebate applied or to be applied to the downpayment.

(D) The remaining amount paid or to be paid by the buyer as a downpayment.

(6) The amount of any administrative finance charge, labeled “prepaid finance charge.”

(7) The difference between item (4) and the sum of items (5) and (6), labeled “amount financed.”

(d) If the payment of all or a portion of the downpayment is to be deferred, the deferred payment shall be reflected in the payment schedule disclosed pursuant to Regulation Z.

(e) If the downpayment includes property being traded in, the contract shall contain a brief description of that property.

(f) (1) Where the contract includes a finance charge determined on the precomputed basis, the contract shall identify the method of computing the unearned portion of the finance charge in the event of prepayment in full of the buyer’s obligation and contain a statement of the amount or method of computation of any charge that may be deducted from the amount of any such unearned finance charge in computing the amount that will be credited to the obligation or refunded to the buyer. Reference to the Rule of 78’s, the sum of the digits, the sum of the periodic time balances or the actuarial method shall constitute a sufficient identification of the method of computing the unearned portion of the finance charge.

(2) Where the contract includes a finance charge which is determined on the simple-interest basis but provides for a minimum finance charge in the event of prepayment in full, the contract shall contain a statement of that fact and the amount of the minimum finance charge or its method of calculation.

(g) The contract shall contain an itemization of any insurance included as part of the amount financed disclosed pursuant to paragraph (3) of subdivision (c) and of any insurance included as part of the finance charge. The itemization shall identify the type of insurance coverage and the premium charged therefor, and, if the insurance expires before the date of the last scheduled installment included in the repayment schedule, the term of the insurance shall be stated.

history: (History: Amended by Stats. 1981, Ch. 1075, Sec. 6. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

title: 2. CREDIT SALES


text: The seller shall not obtain the signature of the buyer to a contract when it contains blank spaces to be filled in after it has been signed.

title: 2. CREDIT SALES


text:
If the cost of any insurance is included in the contract and a separate charge is made to the buyer for such insurance:

(a) The contract shall state whether the insurance is to be procured by the buyer or the seller.

(b) The amount, included for such insurance, shall not exceed the premiums chargeable in accordance with rate fixed for such insurance by the insurer.

(c) If the insurance is to be procured by the seller or holder, he shall, within 45 days after delivery of the goods or furnishing of the services under the contract, deliver, mail or cause to be mailed to the buyer, at his address as specified in the contract, a notice thereof or a copy of the policy or policies of insurance or a certificate or certificates of the insurance so procured.

(d) The provisions of Insurance Code Section 1668 shall apply to any violation of this section.

title: 2. CREDIT SALES


text:
(a) A contract may provide that for each installment in default the buyer shall pay a delinquency charge not in excess of one of the following amounts:

(1) For a period in default of not less than 10 days, an amount not in excess of ten dollars ($10).

(2) For a period in default of not less than 15 days, an amount not in excess of fifteen dollars ($15).

(b) Only one delinquency charge may be collected on any installment regardless of the period during which it remains in default. Payments timely received by the seller under a written extension or deferral agreement shall not be subject to any delinquency charge. The contract may also provide for payment of any actual and reasonable costs of collection occasioned by removal of the goods from the state without written permission of the holder, or by the failure of the buyer to notify the holder of any change of residence, or by the failure of the buyer to communicate with the holder for a period of 45 days after any default in making payments due under the contract.

history: (History: Amended by Stats. 1996, Ch. 301, Sec. 1. Effective January 1, 1997.)

title: 2. CREDIT SALES


text:
The seller shall deliver to the buyer at the time of the buyer’s signature a legible copy of the contract or of any other document which the seller has required or requested the buyer to sign, and which he has signed, during the contract negotiation. In addition to the penalties provided under Article 12.2 (commencing with Section 1812.6) of this chapter, until the seller delivers such documents, the buyer shall be obligated to pay only the cash price. Any acknowledgment by the buyer of delivery of a copy of such documents shall be printed or written in a size equal to a least 10-point bold type and, if contained in the contract shall also appear directly above the space reserved for the buyer’s signature. The buyer’s written acknowledgment, conforming to the requirements of this section of delivery of a copy of such documents shall be a rebuttable presumption of such delivery and of compliance with this section and Section 1803.4, in any action or proceeding by or against an assignee of the contract without knowledge to the contrary when he purchases the contract.

If the holder furnishes the buyer a copy of such documents, or a notice containing the items required by Section 1803.3 and stating that the buyer should notify the holder in writing within 30 days if he was not furnished a copy of the contract or of any other document which the seller had required or requested the buyer to sign, and which he did sign, during the contract negotiation, and no such notification is given, it shall be conclusively presumed in favor of the third party that copies of such documents were furnished as required by Sections 1803. 4 and 1803.7.

title: 2. CREDIT SALES


text: Retail installment sales negotiated and entered into by mail or telephone without personal solicitation by a salesman or other representative of the seller, where the seller’s cash and deferred payment prices and other terms are clearly set forth in a catalog or other printed solicitation of business which is generally available to the public, may be made as hereinafter provided. All of the provisions of this chapter shall apply to such sales except that the seller shall not be required to deliver a copy of the contract to the buyer as provided in Section 1803.7, and if, when the proposed retail installment sale contract is received by the seller from the buyer, there are blank spaces to be filled in, the seller may insert in the appropriate blank spaces the amounts of money and other terms which are set forth in the seller’s catalog which is then in effect. In lieu of the copy of the contract provided for in Section 1803.7 the seller shall, within 15 days from the date of shipment of goods, furnish to the buyer a written statement of the items inserted in such blank spaces.

title: 2. CREDIT SALES


text: If it is explicitly understood between the seller and the buyer that all or any part of the cash price will be paid from the proceeds of a loan to be obtained by the buyer from a third party, the contract of sale or purchase order may be rescinded at the election of the buyer, and all considerations thereupon shall be returned by the respective parties without further demand, if the buyer is unable to obtain such third-party financing upon reasonable terms after having made a reasonable effort to obtain it, and buyer notifies the seller of the rescission within three business days.

history: (History: Added by Stats. 1979, Ch. 1151.)

title: 2. CREDIT SALES


text: It shall be unlawful for any seller to induce or attempt to induce any person to enter into a contract subject to this act by offering a rebate, discount, commission, or other consideration, contingent upon the happening of a future event, on the condition that the buyer either sells, or gives information or assistance for the purpose of leading to a sale by the seller of, the same or related goods.

history: (History: Added by Stats. 1968, Ch. 452.)

title: 2. CREDIT SALES


text: It shall be unlawful for any seller to solicit buyers, in any advertisement, to enter into a retail installment contract with it if the seller does not intend to sell that retail installment contract to a financing agency or other assignee, unless the advertisement clearly states the periodic rate or range of periodic rates, expressed as an annual percentage rate or a range of annual percentage rates that will be used to determine the finance charge imposed on the retail installment contract.

history: (History: Added by Stats. 1991, Ch. 819, Sec. 1.)

title: 2. CREDIT SALES


text:
No contract or obligation shall contain any provision by which:

(a) The buyer agrees not to assert against a seller a claim or defense arising out of the sale or agrees not to assert against an assignee such a claim or defense other than as provided in Section 1804.2.

(b) In the absence of the buyer’s default in the performance of any of his or her obligations, the holder may accelerate the maturity of any part or all of the amount owing thereunder.

(c) A power of attorney is given to confess judgment in this state, or an assignment of wages is given; provided, that nothing herein contained shall prohibit the giving of an assignment of wages contained in a separate instrument, executed pursuant to Section 300 of the Labor Code.

(d) The seller or holder of the contract or other person acting on his or her behalf is given authority to enter upon the buyer’s premises unlawfully or to commit any breach of the peace in the repossession of goods.

(e) The buyer waives any right of action against the seller or holder of the contract or other person acting on his or her behalf, for any illegal act committed in the collection of payments under the contract or in the repossession of goods.

(f) The buyer executes a power of attorney appointing the seller or holder of the contract, or other person acting on his or her behalf, as the buyer’s agent in collection of payments under the contract or in the repossession of goods.

(g) The buyer relieves the seller from liability for any legal remedies which the buyer may have against the seller under the contract or any separate instrument executed in connection therewith.

(h) The buyer agrees to the payment of any charge by reason of the exercise of his or her right to rescind or void the contract.

(i) The seller or holder of the contract is given the right to commence an action on a contract under the provisions of this chapter in a county other than the county in which the contract was in fact signed by the buyer, the county in which the buyer resides at the commencement of the action, the county in which the buyer resided at the time that the contract was entered into, or in the county in which the goods purchased pursuant to the contract have been so affixed to real property as to become a part of such real property.

(j) The seller takes a security interest, other than a mechanics’ lien, in the buyer’s real property which is the buyer’s primary residence where the buyer is a person who is 65 years of age or older and the contract is for a home improvement, as defined in Section 7151.2 of the Business and Professions Code.

history: (History: Amended by Stats. 1999, Ch. 512, Sec. 2. Effective January 1, 2000.)

title: 2. CREDIT SALES

path: 2. CREDIT SALES > 1. Retail Installment Sales > 4. Restrictions on Retail Installment Contracts


text:
(a) An assignee of the seller’s rights is subject to all equities and defenses of the buyer against the seller arising out of the sale, notwithstanding an agreement to the contrary, but the assignee’s liability may not exceed the amount of the debt owing to the assignee at the time of the assignment.

(b) The assignee shall have recourse against the seller to the extent of any liability incurred by the assignee pursuant to this section regardless of whether the assignment was with or without recourse.

history: (History: Amended by Stats. 1975, Ch. 66.)

title: 2. CREDIT SALES

article: 4. Restrictions on Retail Installment Contracts


text:
(a) No contract other than one for services shall provide for a security interest in any goods theretofore fully paid for or which have not been sold by the seller.

(b) Any contract for goods which provides for a security interest in real property where the primary goods sold are not to be attached to the real property shall be a violation of this chapter and subject to the penalties set forth in Article 12.2 (commencing with Section 1812.6).

(c) This section shall become operative October 1, 1982.

history: (History: Amended (as amended by Stats. 1981, Ch. 107, Sec. 4) by Stats. 1982, Ch. 129, Sec. 4. Effective March 25, 1982. Section operative October 1, 1982, by its own provisions, or sooner as prescribed by Sec. 13 of Ch. 129.)

title: 2. CREDIT SALES


text: Any provision in a contract which is prohibited by this chapter shall be void but shall not otherwise affect the validity of the contract.

title: 2. CREDIT SALES


text:
The holder of the contract shall not charge, collect, or receive a finance charge which exceeds the dollar amount shown pursuant to subdivision (b) of Section 1803.3, except to the extent (a) caused by the holder’s receipt of one or more payments under a contract which provides for determination of the finance charge or a portion thereof on the 365-day basis at a time or times other than as originally scheduled, whether or not the parties enter into an agreement pursuant to Section 1807.1, (b) permitted by paragraph (2), (3), or (4) of subdivision (c) of Section 226.17 of Regulation Z, or (3) permitted by Section 1805.8.

No annual fee or charge shall be made in any retail installment contract.

history: (History: Amended (as amended by Stats. 1988, Ch. 479, Sec. 1) by Stats. 1991, Ch. 819, Sec. 2.)

title: 2. CREDIT SALES

article: 5. Finance Charge Limitation

path: 2. CREDIT SALES > 1. Retail Installment Sales > 5. Finance Charge Limitation


text: Contracts may be payable in successive monthly, semimonthly or weekly installments.

title: 2. CREDIT SALES

article: 5. Finance Charge Limitation


text:
The finance charge shall be inclusive of all charges incident to investigating and making the contract and for the extension of the credit provided for in the contract, and no fee, expense or other charge whatsoever shall be taken, received, reserved or contracted for except as otherwise provided in this chapter.

The seller or holder of a retail installment contract may charge and collect a fee not to exceed fifteen dollars ($15) for the return by a depository institution of a dishonored check, negotiable order of withdrawal, or share draft issued in connection with the retail installment contract. The fee is not included in charges as defined in this chapter or in determining the applicable charges which may be made under this chapter.

history: (History: Amended by Stats. 1993, Ch. 101, Sec. 1. Effective January 1, 1994.)

title: 2. CREDIT SALES

article: 5. Finance Charge Limitation


text:
(a) Notwithstanding the provisions of any contract to the contrary, except as provided in subdivision (b) or (c), no retail seller shall assess any finance charge for goods purchased under a retail installment contract until the goods are in the buyer’s possession.

(b) A finance charge may be assessed for such undelivered goods, as follows:

(1) From the date when such goods are available for pickup by the buyer and the buyer is notified of their availability, or

(2) From the date of purchase, when such goods are delivered or available for pickup by the buyer within 10 days of the date of purchase.

(c) In the case of a home improvement contract as defined in Section 7151.2 of the Business and Professions Code, a finance charge may be assessed from the approximate date of commencement of the work as set forth in the home improvement contract.

history: (History: Amended by Stats. 1981, Ch. 1075, Sec. 8. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

title: 2. CREDIT SALES

article: 5. Finance Charge Limitation


text: All contracts entered into between a buyer and a seller on or after January 1, 1983, shall provide for the calculation of the finance charge contemplated by item (1) of subdivision (a) of Section 1805.1 on the simple-interest basis if the date on which the final installment is due, according to the original terms of the contract, is more than 62 months after the date of the contract.

title: 2. CREDIT SALES

article: 5. Finance Charge Limitation


text: The maximum rate of finance charge which may be imposed on amounts advanced by the holder subsequent to the execution of the contract for insurance, repairs to or preservation of the goods, or preservation of the holder’s security interest therein, shall not exceed the annual percentage rate disclosed pursuant to item (b) of Section 1803.3.

history: (History: Amended by Stats. 1981, Ch. 1075, Sec. 9. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

title: 2. CREDIT SALES

article: 5. Finance Charge Limitation


text: No contract shall provide for a finance charge which is determined in part by the precomputed basis and in part by the simple-interest basis, except for any finance charge permitted by Section 1805.8.

title: 2. CREDIT SALES

article: 5. Finance Charge Limitation


text: Unless the buyer has notice of actual or intended assignment of a contract or installment account, payment thereunder made by the buyer to the last known holder of such contract or installment account, shall to the extent of the payment, discharge the buyer’s obligation.

title: 2. CREDIT SALES

article: 6. Payments

path: 2. CREDIT SALES > 1. Retail Installment Sales > 6. Payments


text: At any time after its execution, but not later than one year after the last payment thereunder, the holder of a contract shall, upon written request of the buyer made in good faith, promptly give or forward to the buyer a detailed written statement which will state with accuracy the total amount, if any, unpaid thereunder. Such a statement shall be supplied by the holder once each year without charge; if any additional statement is requested by the buyer, the holder shall supply such statement to the buyer at a charge not exceeding one dollar ($1) for each additional statement supplied to the buyer. The provisions of this section shall apply only to those transactions wherein, instead of periodic statements of account, the buyer is provided with a passbook or payment book in which all payments, credits, charges and the unpaid balance is entered.

history: (History: Amended by Stats. 1969, Ch. 625.)

title: 2. CREDIT SALES

article: 6. Payments


text:
(a) Notwithstanding any provision of a contract to the contrary, the buyer may pay at any time before maturity the entire indebtedness evidenced by the contract without penalty. In the event of prepayment in full:

(1) If the finance charge was determined on the precomputed basis, the amount required to repay the contract shall be the outstanding contract balance as of that date, provided, however, that the buyer shall be entitled to a refund credit in the amount of the unearned portion of the finance charge. The amount of the unearned portion of the finance charge shall be at least as great a proportion of the finance charge, or if the contract has been extended, deferred, or refinanced, of the additional charge therefor, as the sum of the periodic monthly time balances payable more than 15 days after the date of prepayment bears to the sum of all the periodic monthly time balances under the schedule of installments in the contract or, if the contract has been extended, deferred or refinanced, as so extended, deferred or refinanced. Where the amount of the refund credit is less than one dollar ($1), no refund credit need be made by the holder. Any refund credit in the amount of one dollar ($1) or more may be made in cash or credited to the outstanding obligations of the buyer under the contract.

(2) If the finance charge or a portion thereof was determined on the simple-interest basis, the amount required to prepay the contract shall be the outstanding contract balance as of that date, including any earned finance charges which are unpaid as of that date, and provided further that in cases where the finance charge or a portion thereof is determined on the 360-day basis, the payments theretofore received will be assumed to have been received on their respective due dates regardless of the actual dates on which those payments were received.

(b) Notwithstanding any provision of a contract to the contrary, whenever the indebtedness created by any retail installment contract is satisfied prior to its maturity through surrender of the collateral, repossession of the collateral, redemption of the collateral after repossession, or any judgment, the outstanding obligation of the buyer shall be determined as provided in subdivision (a); provided further that the buyer’s outstanding obligation shall be computed by the holder as of the date the holder recovers the value of the collateral through disposition thereof or judgment is entered or, if the holder elects to keep the collateral in satisfaction of the buyer’s indebtedness, as of the date the holder takes possession of the collateral.

(c) This section does not preclude the collection or retention by the holder of any delinquency charge made pursuant to Section 1803.6.

history: (History: Amended (as amended by Stats. 1988, Ch. 479, Sec. 5) by Stats. 1991, Ch. 819, Sec. 7.)

title: 2. CREDIT SALES

article: 6. Payments


text: After the payment of all sums for which the buyer is obligated under a contract and upon demand made by the buyer, the holder shall deliver, or mail to the buyer at his last known address, such one or more good and sufficient instruments as may be necessary to acknowledge payment in full and to release all security in the goods under such contract.

title: 2. CREDIT SALES

article: 6. Payments


text:
(a) The holder of a retail installment contract may, upon agreement with the buyer, extend the scheduled due date or defer the scheduled payment of all or of any part of any installment or installments payable thereunder. No charge shall be made for any such extension or deferment unless the agreement for such extension or deferment is in writing and signed by the parties thereto.

(b) Where the contract includes a finance charge determined on the precomputed basis, the holder may charge and contract for the payment of an extension or deferral agreement charge by the buyer and collect and receive the same, but such charge may not exceed an amount equal to 1 percent per month simple interest on the amount of the installment or installments, or part thereof, extended or deferred for the period of extension or deferral. Such period shall not exceed the period from the date when such extended or deferred installment or installments, or part thereof, would have been payable in the absence of such extension or deferral, to the date when such installment or installments, or part thereof, are made payable under the agreement of extension or deferment; except that a minimum charge of one dollar ($1) for the period of extension or deferral may be made in any case where the extension or deferral agreement charge, when computed at such rate, amounts to less than one dollar ($1).

(c) Where the contract includes a finance charge determined on the simple-interest basis, the holder may charge and contract for the payment of an extension or deferral agreement charge by the buyer and collect and receive the same, but the charge for the extension or deferral agreement may not exceed the lesser of twenty-five dollars ($25) or 10 percent of the then unpaid balance of the contract. Such charge shall be in addition to any finance charges which accrue because such extended or deferred payments are received at a time other than as originally scheduled.

(d) An extension or deferral agreement may also provide for the payment by the buyer of the additional cost to the holder of the contract of premiums for continuing in force, until the end of such period of extension or deferral, any insurance coverages provided for in the contract, subject to the provisions of Section 1803.5.

history: (History: Amended by Stats. 1980, Ch. 1380, Sec. 17. Effective October 1, 1980.)

title: 2. CREDIT SALES

article: 7. Refinancing and Consolidation

path: 2. CREDIT SALES > 1. Retail Installment Sales > 7. Refinancing and Consolidation


text:
The holder of a retail installment contract or contracts may, upon agreement in writing with the buyer, refinance the remaining amount owing on the contract or contracts by providing for a new schedule of installment payments. The holder may charge and contract for the payment of a refinance charge by the buyer and collect and receive the same, but such refinance charge shall be based upon the amount refinanced, plus any additional cost of insurance and of official fees incident to the refinancing, after the deduction of a refund credit in an amount equal to that to which the buyer would have been entitled under Section 1806.3 if he or she had prepaid in full his or her obligations under the contract or contracts. The agreement for refinancing may also provide for the payment by the buyer of the additional cost to the holder of the contract or contracts of premiums for continuing in force, until the maturity of the contract or contracts as refinanced, any insurance coverages provided for therein, subject to Section 1803.5. The refinancing agreement shall set forth:

(a) The amount of the existing outstanding balance to be refinanced, which consists of the remaining amount owing to be refinanced.

(b) The amount of any refund credit.

(c) The difference between subdivisions (a) and (b), which is the net outstanding balance to be refinanced.

(d) Any additional cost of insurance and of official fees to the buyer.

(e) The sum of subdivisions (c) and (d), which is the amount financed.

(f) The finance charge (1) as expressed as the annual percentage rate as defined in Regulation Z and (2) expressed in dollars.

(g) The number amount, and due dates or periods of payments scheduled to repay the indebtedness and the sum of those payments.

The items need not be stated in the sequence or order set forth above; additional items may be included to explain the computations made in determining the amount to be paid by the buyer. Where there is a consolidation of two or more contracts then Sections 1808.1 and 1808.2 shall apply. If the finance charge or any portion thereof is calculated on the 365-day basis, the amount of the finance charge shown pursuant to subdivision (f) shall be that amount which will be incurred by the buyer if all payments are received by the seller on their respective due dates.

history: (History: Amended (as amended by Stats. 1988, Ch. 479, Sec. 6) by Stats. 1991, Ch. 819, Sec. 9.)

title: 2. CREDIT SALES

article: 7. Refinancing and Consolidation


text: (a) If any payment, other than a deferred downpayment, under a contract or refinancing agreement is more than twice the amount of an otherwise regularly scheduled equal payment, the contract or refinancing agreement shall contain the following provision: “The payment schedule contained in this contract requires that you make a balloon payment of$(Amount of balloon payment) which is a payment ofmore than double the amount of the regular payments. You have an absolute right to obtain a new payment schedule if you default in the payment of any balloon payment.”(b) If the buyer defaults in the payment of any balloon payment, he or she shall be given an absolute right to obtain a new payment schedule. Unless agreed to by the buyer, the periodic payments under the new schedule shall not be substantially greater than the average of the preceding installments.

history: (History: Amended by Stats. 1981, Ch. 1075, Sec. 11. Operative October 1, 1982, or sooner, by Sec. 25 of Ch. 1075, as amended by Stats. 1982, Ch. 129, Sec. 12.)

title: 2. CREDIT SALES

article: 7. Refinancing and Consolidation


text: A retail installment contract, which otherwise conforms to the requirements of this chapter, may contain the provision that the seller may at his option add subsequent purchases made by the buyer to the contract, and that the total price of the goods or services covered by the contract shall be increased by the price of such additional goods or services, and that all finance charges and installment payments may at the seller’s option be increased proportionately, and that all terms and conditions of the contract shall apply equally to such additional goods or services. The contract may also provide that the goods purchased under the previous contract or contracts shall be security for the goods purchased under the subsequent contract but only until such time as the total of payments under the previous contract or contracts is fully paid.

history: (History: Amended by Stats. 1970, Ch. 546.)

title: 2. CREDIT SALES

article: 8. Add-on Sales

path: 2. CREDIT SALES > 1. Retail Installment Sales > 8. Add-on Sales